39 F. Supp. 3d 752
E.D. Va.2014Background
- FBP appeals Magistrate Judge Leonard's sanctions and discovery rulings related to ICI, Vista, Sea Traffic, and Baranskyy.
- Judge Leonard found FBP violated discovery orders by not producing ICI documents, employee workbooks, Baranskiy emails and attachments, and loan-related materials.
- Judge Leonard held alter-ego relationships among FBP, Vista, and Baranskiy and found the Sea Traffic loan to FBP was a sham to avoid creditors.
- Baranskiy was found to have control over ICI documents or the right to obtain them, triggering production obligations.
- FBP was ordered to pay fees and expenses to Flame and Glory Wealth; Vista and FBP were found as alter egos for purposes of the action.
- The district court conducted de novo review and upheld all sanctions and findings, overruling FBP’s objections.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ICI documents were in FBP’s control | FBP contends no control over ICI documents. | FBP argues Baranskiy does not control ICI documents. | FBP violated discovery; Court upheld control finding. |
| Whether employee workbooks must be produced | FBP argues workbooks are employee/personal property and not producible. | FBP claims protection and lack of possession justify non-production. | FBP violated discovery; production required or sanction sustained. |
| Whether Baranskiy’s emails and attachments must be produced | FBP’s production was incomplete and belated; emails beyond director role were required. | FBP argues limited scope and voluntary production. | FBP violated discovery; broader email production required and sanctions upheld. |
| Whether the Sea Traffic loan was a sham and related repayments admissible | FBP’s loan to Sea Traffic used to avoid creditors; repayments should be barred as evidence. | Loan was legitimate; challenge to its treatment is improper. | Loan deemed a sham; evidence of repayments barred; sanctions upheld. |
| Whether sanctions were appropriate and appropriately tailored | FBP's noncompliance warranted strong sanctions under Rule 37. | Sanctions were excessive or misapplied to attorneys. | Sanctions appropriate; both FBP and counsel liable; systemic deterrence warranted. |
Key Cases Cited
- Vitol, S.A. v. Primerose Shipping Co. Ltd., 708 F.3d 527 (4th Cir. 2013) (alter ego/foreign proceedings and discovery implications)
- E.I. DuPont de Nemours & Co. v. Kolon Indus., Inc., 286 F.R.D. 288 (E.D. Va. 2012) (control/possession for discovery purposes; related entities)
- Green v. John Chatillon & Sons, 188 F.R.D. 422 (M.D.N.C. 1998) (belated compliance does not constitute compliance)
- United States Gypsum Co. v. United States, 333 U.S. 364 (1948) (clear error standard and review of findings)
- Copen v. House, 45 F.3d 425 (4th Cir. 1994) (abuse of discretion standard for discovery orders)
- Reddick v. White, 456 Fed.Appx. 191 (4th Cir. 2011) (magistrate sanctions and non-dispositive/dispositive review)
- Anderson v. Found. for Advancement, Educ. & Emp't of Am. Indians, 155 F.3d 500 (4th Cir. 1998) (Anderson four-factor test for sanctions)